ECONOMY

Banks lift burden off debtors

banks-lift-burden-off-debtors

Loan repayment installments by households and enterprises hurt by the crisis have now been frozen up to the end of the year, following a decision by the Hellenic Bank Association on Tuesday.

According to Kathimerini data, up until now, the measure had covered about 280,000 individuals and companies for which the obligation of loan installment payments to banks had been suspended up until September. That has now been extended for three more months.

A further freeze on due payments was considered necessary because of the general slump in the economy and the forecasts for a rise in unemployment, with the Hellenic Bank Association confirming in this way its active and efficient support, as it said in its statement.

The data that banks presented to the country’s creditors on Monday showed that the sum of loans frozen had come to 18 billion euros at the end of May, with a small increase reported in June. The same figures showed that the vast majority of the frozen loans concerned credit to households and small enterprises needing to service their loans. Some €12-13 billion of the above sum has to do with mortgage and consumer loans to individuals and small enterprises, while the other €5 billion pertains to the loans of medium-sized and large enterprises that have entered the program for the suspension of capital repayment.

It should be noted that the suspension granted concerns 100% of the monthly tranche due to be paid by individuals and small corporations, while for the other companies it only concerns the capital borrowed.

Banks estimate that the loans for which tranche payments have been suspended will increase in the coming months as a growing number of enterprises face a reduction – if not total collapse – in their turnover despite the lifting of the lockdown measures. Besides the hotel sector, there will also be a dramatic drop for commercial enterprises as well as manufacturers, whether they rely on domestic demand or on exports.

The banks’ decision should support the market for the latter to manage the effects of the recession, as the economy’s contraction is expected to bottom out in the third quarter.